Bitcoin price rises as US inflation drops

The Consumer Price Index increased 3 per cent from a year earlier, the slowest rate for over two years

The price of Bitcoin (BTC-USD) whipsawed on Wednesday edging up towards the $31,000 level as US Consumer Price Index (CPI) data came in hot.

By 3.30 pm in London, it was nearly 1 per cent higher on the day to trade at $30,760 having dropped marginally earlier.

New data showed that US inflation dropped steeply in June. The Consumer Price Index increased 3 per cent from a year earlier, the slowest rate for over two years. The report was surprisingly optimistic and will form future rate hiking cycles for the Federal Reserve.

Cold as ice – that is the number that comes to mind when you look at the US CPI data, said Naeem Aslam, CIO at Zaye Capital Markets. This is the lowest number since the pandemic, and this is definitely good news for the economy, but it is important to keep in mind that this is still a temporary situation. But in general, traders are cheering this event, and while futures have moved up, the dollar index has shed more momentum.

In the meantime, ether (ETH-USD) also added nearly 1 per cent to trade at $1,895.

The moves come after a positive market forecast from UK’S Standard Chartered bank on Monday. Experts predicted that prices of Bitcoin would reach $50,000 by the end of 2023 and surpass the $120,000 level next year. This is an upward revision from the $100,000 it forecasted in April.

We now think this projection is too conservative, and we therefore see upside to our end-2024 target, the report stated, citing higher bitcoin miner profitability as one of the factors that will drive the price.